The ever-alert Nobel Prize winner is beginning to get scared about the economy. You know, the one that’s past numerous all-time market peaks and is reported to have been in recession for a year already:
I’ve been ruminating over economic prospects for next year, and I’m getting scared. Two points:
1. The economy is falling fast. We’ll see what tomorrow’s employment report says, but we could well be losing jobs at a rate of 450,000 or 500,000 a month.
2. Infrastructure spending will take time to get going — a new Goldman Sachs report suggests that projects that are “shovel-ready” are probably only a few tens of billions worth, and that a larger effort would take much of a year to get going. Meanwhile, it’s very questionable how much effect tax rebates will have on consumer demand.
Why is Krugman worried about losing a few more jobs anyhow? He’s a good Keynesian. Just have the government hire 450,000 or 500,000 people per month. After all, government jobs and private sector jobs are perfectly equivalent, right?
Question: just what do government employees produce anyway? And according to at least one report, we could reduce the number of workers by 25 percent without harming US productivity in the slightest.